08.01.2009

Crisis and defensive demands

Mike Macnair examines the crisis and the left's 'programmes'

For the last year Britain has been in an economic ‘phoney war’. There has been an obvious financial crisis and a great deal of loss of paper wealth. But for most people the ‘credit crunch’ has been something of a spectator sport. There has perhaps been a widespread touch of schadenfreude as the Wall Street and City of London ‘Masters of the Universe’ seem to get their come-uppance and laisser-faire ideologues are shunted to the margins by massive state intervention.

As 2008 approached its end, crisis became manifest in the ‘real economy’. Car plants are taking extra-long shut-downs, and Land Rover-Jaguar has begged for a bail-out. Several retail chains, most prominently Woolworths, have gone bust. Unemployment has risen further and faster than in the recession of the early 1990s.¹ The UK government is contemplating a further bank bail-out. And it has, without any great fanfare, slightly liberalised its rules for social security assistance with mortgage payments for the unemployed.²

The left has produced in the ‘phoney war’ period a variety of ‘action programmes’ to respond to the crisis. Some of these have been broadly left Labourite proposals to carve the cake more fairly and return to the economics of the cold war period, like the Left Economics Advisory Panel’s ‘People’s Programme for the Crisis’,³ the Morning Star’s Communist Party of Britain’s ‘Left Wing Programme’⁴ or the Socialist Workers’ Party’s ‘People Before Profit Charter’.⁵ Others are more heavily based on Leon Trotsky’s 1938 Transitional programme, like the eight point plan offered by the International Socialist Group’s Andy Kilmister in the December International Viewpoint,⁶ the Alliance for Workers’ Liberty’s ‘A Workers’ Plan for the Crisis’,⁷ the ‘Manifesto of the International Marxist Tendency’,⁸ or Workers Power’s ‘The Workers’ Answer to the Crisis’.⁹

Though there is now clearly a recession in the ‘real economy’, the probable shape and effects of this recession remain extremely unclear. And on these effects depend the usable answers to the question: how should the workers’ movement respond?

How bad?

The outcome - the probable length and severity of the recession - is still very unpredictable. The reason is that we are still in the ‘crisis’ phase of the cycle. The capitalist business cycle naturally follows a ‘sawtooth’ pattern: a gradual rise of economic activity, accelerating in the boom period and then slowing slightly as this period comes to an end, followed by financial and credit crisis and a rapid and disorganised fall, the phase of ‘crisis’ proper. The phase of crisis is in Hegelian terms a ‘transition from quantity to quality’, or in Ilya Prigogine’s phrase a ‘bifurcation point’ or ‘chaotic transition’.¹⁰ Before such a transition the behaviour of the system is more or less lawful or predictable. While such a transition is in progress, while possible outcomes can be identified, no categorical predictions can be made.

The range of possible outcomes of the present crisis is extraordinarily wide. At one extreme, the degree of dislocation of the financial order is such that we cannot wholly rule out a global collapse of capitalism and the money system. Collapse, producing collapse into mass starvation, petty production and warlordism, has already been produced in a number of ‘peripheral’ countries. If this outcome went global it would be - in the phrase used by Marx and Engels in the Communist Manifesto, “the mutual ruin of the contending classes”.

At the other extreme, the underlying mechanisms of value transfers from the ‘periphery’ countries to the ‘centre’ countries which allowed shallow recessions in the ‘centre’ and in particular in the ‘Anglosphere’ in the recent past have not completely failed. At the end of the day the core of these mechanisms is that the dollar is global reserve money. That means that other state currencies are only money to the extent that they are exchangeable against dollars. International borrowing has to be from dollar holders, and financial losses at home mean that these credit facilities tend to be withdrawn to prop up the lenders’ solvency. This crisis was made in the US; but it has more immediately had disastrous effects on - for example - the economies of Ukraine, Pakistan and Belarus, requiring them to seek IMF loans.

The dollar is global reserve money because of the military strength of the US, in spite of its (relative only) economic decline. Military strength is, of course, ultimately based on strength in material production: particularly arms production, but behind arms production stands general productive capacity. But once a dominant military power exists in the capitalist world order, it can draw tribute from other capitals, which allows it to sustain military-economic dominance, until it is faced with the test of great-power war.

Hence, for the dollar to be replaced as the global reserve currency requires that the US experience military over-extension and failure on the scale of the British military over-extension in 1914-18 and military failure in 1940-41, which brought to an end the role of the pound as global reserve currency. We should not expect the dollar to cease to be the global reserve currency merely because the dollar declines, even severely, against other currencies: this has happened episodically since the Vietnam War, and the economic consequences have been primarily outside the US. On this basis, it is possible that the recession in the US - though longer and more severe than recent recessions - will still be relatively shallow and short-lived compared to pre-1945 recessions.

Britain in particular has ‘slipstreamed’ in the wake of the US since the 1980s. In the first place, the City of London plays the role of an ‘offshore’ centre for financial transactions by US financial operators and has various US legislative exemptions in this connection. Secondly, the UK has played in the EU the role of a poster-child for neo-liberalism and an agent for blocking measures of integration opposed by the US. Hence, the US has not used its political leverage to put pressure on the UK to maintain the value of the pound relative to the dollar, ie to accept unemployment exported from the US by the US allowing the dollar to slide. (This is in contrast to the experiences of both Japan and mainland Europe. More recently, US diplomatic pressure on China to revalue the renminbi has had limited effect, since the US has less political control and leverage in relation to the Chinese regime.)

The severity of the present crisis and its political implications - ie the extent to which it is generally understood by pro-capitalist commentators to have been exacerbated by lack of transparency in financial markets and company structures - may lead the US to reorient its alliance structures and orientation in ways which involve dumping the UK side-kick. For example, the US might agree to attack offshore dealing arrangements, or permit a speculative attack on the pound to drive the UK government towards insolvency. In this case, even if the US and global recession is not that severe, there will be a specific and very severe crisis in the UK.

All this discussion of possibilities is inherently speculative. Working the numbers in detail, as some Permanent revolution authors attempt, would not produce anything any less speculative, precisely because where we are is in the moment of crisis or chaotic transition. Thus even very precise information would not generate high levels of predictability.

Alternatives

This problem of prediction has political consequences. At one extreme, the recession of the early 1990s was characterised as a “middle class recession”, whose main victims were in middle management, financial services, advertising and so on; and several people, notably Lord Desai last October, have suggested that the present recession will be similar.¹¹ Certainly, a recession like the early 1990s, or even one like the early 1980s, would not produce mass political support for radical ‘action programmes’ like those currently widely offered on the far left: the result in a year or eighteen months’ time would look like the far left crying wolf yet again.

Meanwhile, the state bail-outs which are now going on will - if they succeed temporarily - tend to replace the contradictions which have produced crisis, with contradictions between states and a logic which will lead towards the formation of alliance systems and quasi-imperial protection arrangements and hence, in the medium term, towards war between the great powers. The same is true of reflationary measures based on increased state borrowing or simply printing money (“quantitative easing”). Reflation of the US economy by such measures will either be at the expense of other countries - or, if they also print more money, fail, producing merely stagflation.

At the other extreme, a generalised collapse would require as minimum action the introduction of World War II-style systematic directive planning control of all economic activities and generalised rationing of food and other essential supplies. It is likely that the capitalist state would itself introduce such measures in the hope that they would allow it to survive. The demands currently raised in far-left ‘action programmes’ derived from the 1938 Transitional Programme would then appear insufficiently radical ...

Defensive action

In my articles on the crisis last October (Weekly Worker October 2 and 16) I argued that even a severe crisis would not immediately pose the question of the working class taking power in Britain, for two reasons. The first is that the workers’ organised movement is too weak: the trade unions and the Labour Party are hollowed-out bureaucratic shells with very limited life at the base, while the far left is paralysed by its division into competing sects, including those sects of one member, the ‘independents’. The second is that to break capitalist power requires common action of the working class on a continental scale, not merely in one country.

A real generalised collapse would be a different matter. In these circumstances the question of power would be immediately posed, whether the workers’ movement was “ready or not”. We have to hope that this will not happen, because the present severe weakness of the workers’ movement means that the most likely outcome would be some form of authoritarian regime.

Generalised collapse apart, then, the immediate task is not to aim either for the short-term seizure of power by the working class, or for governmental solutions. It is to strengthen the organised movement of the working class round trade union, cooperative, and so on, defensive activities: in essence, to rebuild solidarity at the base. And it is to fight to build a workers’ party which can politically defend and coordinate these activities. That, in turn, means a party which stands for the independent interests of the working class as a class, independent alike of the bourgeoisie and of the nation-state: a Communist Party. That is, a party which stands for the idea that the working class should in the medium term take over running society and in the immediate term organise to defend its independent interests; which stands for radical democracy, against both the state and the labour bureaucracy; and which stands for the international solidarity of the working class, not ‘British’ (let alone English or Scottish) solutions.

This approach may seem minimalist compared to the semi-Keynesian governmental projects of the mainstream left or the struggle for soviet power through a ‘transitional programme’ posed by the far left. But in fact, it poses for the left Herculean tasks. These are tasks of collectively reorienting itself to a world in which neither Labour, nor the trade union bureaucracy, will do the practical work of building solidarity at the base. And they are tasks of overcoming its own disunity in order to enable itself to do this sort of work, which not even the biggest fragments (SWP, Socialist Party) can do on their own.

Demands on government

A defensive approach would have to have its basis in mass work to rebuild elementary solidarity and in work to construct a united Communist Party. But it does involve making political demands on governments and parliaments. There is an important difference between on the one hand hoping for capitalist state handouts to protect us from the crisis and its effects, or calling for bigger and better Keynesian stimulus measures, and on the other hand making defensive demands on the state.

The appropriate demands are demands which would strengthen the independent movement of the working class if they were won. To the extent that they are popularised and fought for and not won, the campaign would serve to expose the corrupt character of the politicians, judiciary and so on - and thus to legitimise workers’ illegal or extra-legal action for solidarity.

There are three aspects to this. The first is the general struggle for political democracy against the rule-of-law state. This may appear to be economically neutral: but in fact, every democratic demand won against the state strengthens the hand of the working class in concrete economic battles. Second is the struggle for general laws in the interests of the working class: like limits on the working day or minimum-wage laws. Such laws do not imply reliance on the state to enforce them: what they do is to strengthen the hand of groups of workers in dispute with their employers.

Third. Our strategic aim is to overthrow the capitalist state system and replace it with workers’ power. The workers’ movement immediately needs to rebuild working class social solidarity at the base. But in fact the state levies taxes - in a regressive way, ie so as to accentuate the privileges of the capitalists and the upper part of the middle class - and uses part of the funds generated to provide a large part of the limited provision for social solidarity and public goods which actually exists. The crisis will lead some capitalists and more petty proprietors to demand “lower taxes”, by which they mean more regressive taxation, and less state social provision. David Cameron represents them in this. We need to fight for progressive taxation and to defend the existing state social provision against cuts.

This is the most difficult and delicate aspect of the problem. Much of the product of taxation is, from the point of view of the working class, wasted. And capitalist state social provision is commonly characterised by bureaucratic tyranny. But it is still true that progressive taxation, and the existence of state social provision, strengthen the position of the working class under capitalism. Progressive taxation de-legitimises the capitalists’ skimming the collective till, while state social provision increases working class self-confidence. It is for this reason that both have been under attack since the 1970s.

I do not have enough space or time to discuss the ‘tax and spend’ question in this article. Formulating defensive demands on this question also needs fairly detailed research into the state budget. So I mention it to leave it on one side. For the same reason, what is said below about democratic demands and demands for general laws are examples of a method: this article does not constitute an exhaustive ‘action programme’ like (some of) those I have listed.

Freedom of association

A communist minimum programme requires at its heart the struggle for the democratic republic: election and recallability of all public officials (and hence abolition of the monarchy and the House of Lords), the replacement of the standing armed forces with a militia, generalised trial by jury, self-government of the localities, separation of church and state, and so on. But that is an offensive programme for the working class to take political power. The use of democratic demands in connection with defensive struggles against the effects of crisis is the use of selected elements of the minimum programme which are particularly relevant to the crisis.

The first and most fundamental of these is (partially) shared by all the left ‘action programmes’: abolition of the anti-union laws. The slogan should be expressed as “abolition”, not “repeal”: trade unions are illegal at common law (the first anti-union Act of Parliament was the Confederacies of Masons Act 1424; picketing has been unlawful since around the 1240s) and even repeal of everything passed since 1970 would still allow judges to invent new means of penalising unions or reinvent ancient ones.

“Partially shared” because there is a more general democratic principle involved: freedom of association. The unions are not only savagely restricted by the Tory anti-union laws and judges issuing ‘labour injunctions’: they are also subject to bureaucratic regulation by the Certification Officer and judicial review. Cooperatives, mutuals, friendly societies and so on are similarly subject to bureaucratic regulation, formerly by the Registrar of Friendly Societies, now by the Financial Services Authority. In some cases such groups may find themselves identified as charities and subject to regulation by the Charities Commission. Political parties are required to be registered under one of the first acts of the Blair government.

These various schemes of bureaucratic regulation are supposedly set up to prevent frauds, misappropriation of collective funds and so on. In fact, they don’t do so: they merely serve as state gatekeepers to control collective action.

The struggle for freedom of association is also a struggle at EU level. The European Court of Justice has attacked trade unions under EU competition law, while the corporations have attempted in 2008 to launch an attack on cooperatives.¹²

The struggle for freedom of association is a struggle for a general democratic demand. But it is also the struggle for the most elementary need of the working class as a class: to organise itself freely and independently of the capitalist state. Conditions of economic crisis and recession make this need more, not less, urgent.

Transparency

The Trotskyist versions of action programmes contain a demand sanctified by its presence in the 1938 Transitional programme, but none the worse for all that: “Open the books!” The versions of the pro-bureaucratic left (LEAP, SWP, Morning Star-CPB) naturally omit this demand. Implementing it would be as painful for labour bureaucrats - even the toytown miniature bureaucrats of the SWP’s top-down hierarchy of full-timers - as it would be for capitalists.

In the Transitional programme the question is posed as one of workers’ control. And it is indeed true that working class action, in which the administrative and financial staff of a firm act in solidarity with its direct producers, can expose secrets which the employers would prefer to keep hidden. But the question of transparency is much larger than this. Capitalists and bureaucrats alike rely on legal rights to the control of information: official secrecy, commercial confidentiality, ‘privacy’, and ‘intellectual property rights’ (copyright, patents, etc). An outrider is the principle of ‘candour’ applied to justify secret discussions in the civil service and the SWP alike. Private law is used to protect official secrets, as in the Spycatcher case; ‘state security’ is used to protect murky corporate dealings, as in the Al-Yamamah arms scandal. Transparency - the abolition of state and private rights to control the publication of information, and the insistence that the inner workings of state and business alike should be exposed to public view - is thus a democratic demand.

The present crisis poses this question with particular sharpness. The continuing severity of the ‘credit crunch’ is partly due to the fact that it is very hard for lenders to discover whether borrowers are solvent or not. This difficulty flows from ‘off balance-sheet’ transactions, ‘creative accounting’, and murky networks of holding and subsidiary corporations and offshore set-ups of one sort or another. Capitalism, in other words, needs more transparency than it is currently able to deliver. Its baroque efforts to construct secrecy, which served it well in increasing the share of profits at the expense of labour and taxes in the 1970s-2000s, are now paralysing its own ability to function.

Transparency thus extends beyond the simple abolition of legal rights to secrecy. An attack on both ‘offshore’, and the legal doctrine of the separate corporate personality of even wholly artificial companies (Salomon v Salomon) is needed.

Freedom of movement

Under the present political order capital is free to move, but workers are not: their movement is controlled and regulated by immigration controls. The effect is, of course, not to actually control labour migration, which could only be achieved by a totalitarian regime. It is to create a class of ‘illegal people’, undocumented workers, whose lack of legal status is an obstacle to their organising to resist their employers.

The left has generally treated this issue as a secondary aspect of fighting racism. It is, of course, true that the Tory press uses racist and chauvinist ideas in support of immigration controls, and that a Tory-racist culture operates in the Border and Immigration Agency. Fundamentally, however, immigration controls function to promote super-exploitation, and as the crisis bites capitals will be all the keener to extend them and create more undocumented workers. If the US happens to choose to abandon its British client, the flow will be reversed and it will be British economic migrants in other countries who begin to find themselves targetted by immigration control regimes.

Freedom of human movement is a general democratic demand. It is also an elementary interest of the working class as a class: not because workers want to lead a nomadic life following the movements of capital, but because controls on movement weaken the immediate defensive struggles of workers against their employers.

Self-government of the localities

Self-government of the localities is a fundamental principle of democratic republicanism - and one of the issues raised in the early Marxist programmes and in Engels’ critique of the Erfurt programme.¹³

The last period has seen a step-by-step process of enfeeblement of the partial and limited local democracy which used to be allowed in this country, and which was one of the major bases of the labour movement. Some of the decisive steps were taken by the Thatcher government, but the process began earlier and has continued under Blair and Brown. The effect has been a transfer of wealth and power from the working class to the capitalist class, and incidentally from the petty proprietors (small local businesses) to the corporations.

To the extent that there is even limited local democracy, the working class can use it in a limited way as one of its means of self-defence. It is for this reason that the offensive of the capitalist class has involved attacks on local democracy - through bureaucratic and financial centralisation of power in the hands of the central state, through compulsory competitive tendering, through endless ‘reorganisations’ aimed to multiply authorities and reduce transparency, and through judicial review.

The complexity of the capitalist attack makes formulating demands in this field difficult. But the struggle for local democracy would involve at least the following. Abolition of rate-capping and of central government intervention powers. Abolition of the uniform business rate: it is noteworthy that the UBR is regressive in structure and that its real value has declined since its introduction, while domestic rates have gone up. Abolition of judicial review of the decisions of elected bodies. Rejection of directly elected mayors, etc. Abolition of compulsory competitive tendering.

General laws

I have already referred to the question of maximum-hours and minimum-wage laws, and made the point that it is not a question of relying on the state to enforce these laws (it won’t do so effectively), but of using the struggle for laws to de-legitimise poverty wages and excessive hours, thereby supporting workers’ collective action against them. The current minimum wage is grossly insufficient and its combination with the income support system amounts to a taxpayer subsidy to sweatshop operators.

The CPGB’s draft programme does not include a specific figure, but that the minimum wage should be set at “what is needed to physically and culturally reproduce the worker and one child”. The Trotskyists’ action programmes generally include the ‘sliding scale of wages’, ie indexation against inflation. Since there is a present fear of deflation, ie falling prices, indexation might prove to be a problematic demand.

In the field of maximum hours, the UK government has been continuing to fight against efforts to impose maximum hours rules through EU legislation. Here, as in several other aspects of the field of general laws, the role of EU law means that the workers’ movement needs to unite for common action on the scale of the EU in order to conduct basic defensive struggles.

Housing

A specific instance of the question of general laws is housing. Housing is in a sense at the centre of the present crisis, since the pricking of the house price bubble, and the consequent unravelling of mortgages and the ‘collateralised debt obligations’ which ‘repackaged’ mortgages, were the trigger for the crisis. The responses of the various left action programmes are rather varied. LEAP, the CPB, SWP, Kilmister, AWL, IMT and Workers’ Power all call for a crash programme of council house building; but without, for some reason, calling for a repeal of the Tories’ ‘right to buy’ legislation.

On mortgaged property and repossessions, the CPB calls for “government action to ... stop house repossessions”. The SWP calls for “No house repossessions”, Kilmister, more limitedly, for a moratorium on repossessions. LEAP, Kilmister and the AWL offer as an alternative to repossession the conversion of the mortgage into social rented tenure. Without changing the law governing social rentals (which requires councils to charge ‘market’ rents) this leads nowhere, since rents would be likely to be as expensive as the mortgage was. The SWP and AWL call for the confiscation of vacant properties to provide social housing.

Workers Power calls for a moratorium on mortgage payments and the “abolition of mortgage interest”: a contradiction in terms, as if they were to demand the ‘abolition of profits’ without the overthrow of capitalism.

Comrade Jack Conrad has said that the CPGB stands for the traditional demand of the Communist Manifesto, of the nationalisation of the land.¹⁴ He has certainly argued for this demand in connection with the EU,¹⁵ but it isn’t at the moment in our Draft programme. We should probably take the opportunity of the redraft to put it in or at least discuss it. The point is not straightforward, because the extent of the freehold-mortgage regime in housing and agriculture is now such that a simple demand for nationalisation of the land would be perceived by very broad masses as an attack on their rights; while - for example - the Chinese Stalinist bureaucracy has used the nationalised status of the land to evict farmers and householders without compensation to make way for developers.¹⁶ In my October 16 article I argued for the more limited demand of public ownership of the mortgagees and landlords’ interests in the land. It might be that the minimum programme should include this and another limited demand: land value tax, as advocated by the Labour Land Campaign.¹⁷ In any case, however, nationalisation of the land does not really take us anywhere with the present crisis. This is because it is an offensive, not defensive, demand.

What is common and true across the various action programmes is this. The current crisis proves the “property-owning democracy” policy pursued by the US and UK governments to be a snare and a delusion. Right-wingers have seriously argued that part of the cause of the property price bubble and its collapse was precisely the US government putting pressure on lenders to give mortgages to the poor.¹⁸

That failure means that irrespective of whether the working class takes power or the land is nationalised, etc, there is going to have to be a shift in housing away from freehold-mortgage to rental tenure. That is going to take place even if the current recession is mild, by way of lenders tightening loan conditions to avoid a repeat of the 1998-2007 bubble.

In this context, several of the demands of the various action programmes are appropriate defensive demands, but they need to be combined with others. Yes to the LEAP and others’ proposal of public ownership rental as an alternative to repossession. Hence yes to direct action against repossessions in the working class districts.

But this needs to be combined with demanding the abolition of the ‘market rents’ policy imposed on local government and housing associations. It also needs to be combined with the demand for the restoration of rent control more generally. Not in the baroque and ineffective forms it took in the last period of the rent acts, but with a clear mandate to reduce the share of social surplus going to landlords, and under democratic, not bureaucratic and judicial, control.

Yes to the SWP and AWL proposals for the confiscation of vacant housing for renting out. And, if this is not achieved and there are massive repossessions and homelessness: the movement needs to think about organising mass squatting campaigns like those after World War II.

Yes to more council house building - under democratic control. But that also implies abolition of the right to buy legislation.

Housing thus provides a specific example of my general theme. Raising defensive demands for legislation in the interests of the working class is not counterposed to building mass action at the grass-roots. On the contrary, it can assist in building mass solidarity action

Notes

1. business.timesonline.co.uk/tol/business/economics/article5447297.ece
2. news.bbc.co.uk/1/hi/uk_politics/7810806.stm
3. www.johnmcdonnell.org.uk/2008/10/peoples-programme-for-crisis.html
4. communist-party.org.uk/index.php?option=com_content&view=article&id=316:communists-demand-policies-for-the-people-not-big-business&catid=47:autum-08&Itemid=2
5. peoplebeforeprofit.wordpress.com/
6. www.internationalviewpoint.org/spip.php?article1581
7. www.workersliberty.org/workersplan
8. www.marxist.com/imt-manifesto-on-crisis.htm
9. www.workerspower.com/index.php?id=167,0,0,1,0,0
10. Ilya Prigonine & Isabelle Stengers, Order out of Chaos (London 1985)
11. www.dailymail.co.uk/news/article-1079754/Middle-class-recession-hit-Britains-white-collar-workers-economist-warns.html
12. Laval and Viking cases, discussed at www.amicustheunion.org/lavalvikingruffert/; Coops, www.coopseurope.coop/spip.php?article592
13. Programme of the Parti Ouvrier (1880) www.marxists.org/archive/marx/works/1880/05/parti-ouvrier.htm, A5, “the commune to be master of its administration and the police”; Engels, Critique of the Draft Social-democratic programme of 1891, www.marxists.org/archive/marx/works/1891/06/29.htm, part II, “Complete self-government in the provinces, districts and communes through officials elected by universal suffrage. The abolition of all local and provincial authorities appointed by the state.”
14. www.cpgb.org.uk/worker/731/adjunct.html
15. www.cpgb.org.uk/worker/526/eu.html; www.cpgb.org.uk/books/Europe%201.htm
16. E.g. www.greenleft.org.au/2007/708/36761
17. www.labourland.org/downloads/papers/land_value_for_public_benefit.pdf
18. E.g. Ron Paul, www.house.gov/paul/tst/tst2008/tst051108.htm